B. S. Kapadia, J. - The following question has been referred by the Tribunal to this Court for its opinion :
'Whether, on the facts and in the circumstances of the case, additional compensation of Rs. 5,72,792 awarded by the ld. Civil Judge (Senior Division), Jamnagar, is includible in the total wealth of the assessee for each of the assessment years under reference ?'
2. The short facts leading to the present reference may be stated as under :
3. The assessee had purchased lands bearing Survey Nos. 225(2) and 225(4) admeasuring about 11 acres at Jamnagar in December, 1956. The lands were acquired under the provisions of the land on 15-8-1960. The Land Acquisition Officer had awarded compensation of Rs. 24,293. In the Reference under s. 18 of the Land Acquisition Act, the Civil Judge (Senior Division), Jamnagar, increased the compensation to Rs. 5,72,892. However, the Gujarat High Court on appeal by the State Government determined the compensation at Rs. 24,293.
4. The WTO included while making the assessment orders for asst. yrs. 1961-62 to 1963-64 dt. 11-3-1980 the amount of compensation awarded by the Civil Judge, Jamnagar. The CWT in appeal exercised his appellate powers under the Act by the order dt. 17-9-1982 and set aside the assessment order passed by the WTO, following the directions given by the Tribunal in WT Applications Nos. 69 to 71 of 1975-76 that the only amount includible in the appellants total wealth would be Rs. 24,293 being the compensation awarded by the Land Acquisition Officer in respect of the lands acquired by the government. The revenue challenged the said order passed by CWT in appeal to the Tribunal and the Revenues appeals stand rejected by the Tribunals order dt. 10-1-1984. Therefore, this Reference is made under s. 27(2) of the WT Act.
5. Similar reference in assessees own case being WT Ref. Nos. 19 of 1976 and 5 of 1977 were before this Court. Similar question was referred. In the said case the decision of Supreme Court in Mrs. Khorshed Shapoor Chenai v. Asstt. CED, A.P. : 122ITR21(SC) was referred to. In the said Supreme Court case the principle enunciated is that in land acquisition proceedings, the claimant has only one right to receive compensation for the land at its market value quantified by the Collector under s. 11 and by the Civil Judge under s. 26 of the said Act. The award of the Collector is merely an offer which on acceptance, will extinguish the right to compensation. The non-acceptance of the offer, or the acceptance of the offer under protest with a prayer for reference, will keep the right of compensation alive which a claimant can prosecute in the Civil Court. The right merely a right to litigate the correctness of award. The correctness of the award is a collateral question in course of the reference. The evaluation of this right made by the Civil Court in reference would not be the evaluation of the asset for the purposes of either ED Act or the WT Act on the specified date. The estimated value of the right to receive compensation, which is a property, is equally to Collectors award but can never be equal to the tall claim made by the claimant in the reference, nor equal to the claim actually awarded by the Civil Court, since the hazard of litigation is a detracting factor in assessing the reasonable and proper market value of the property on a specified date, namely, the date of death under the ED Act. The assessing authority is under obligation to estimate the value bearing in mind the particular nature of the property, the marketability and the surrounding circumstances, including the hazard of litigation at the of litigation at the relevant date.
6. The ld. counsel for the revenue, therefore, relied heavily on this decision in support of his contention that the Tribunal could not have assessed the value of the wealth merely by reference to the High Courts decision, and, in any case, this Court should not answer the questions since the necessary material to answer the questions as to whether the market value has been properly assessed on the basis of the Civil Court, was not collected by the assessing authority by going through the correct exercise as indicated by the Supreme Court. However, on behalf of the assessee, it is pointed out that the Court should not lose sight of the basic fact that the market value has been assessed in the present case by the High Court by a reasoned and considerate judgment which would be binding, if not final, at the point of time when the WTO was called upon to assess the value of the asset while passing the order of assessment. It is further submitted that the fact that the assessee has gone in appeal to the Supreme Court from the order of the High Court is not of much consequence, except for a very limited purpose since the leave granted by the High Court for appeal to the Supreme Court was, as a matter of course, having regard to the constitutional provision then prevailing, namely, the value of the subject matter of appeal. It was also submitted that the Supreme Court will take further time for deciding the appeal and more that twenty years have already elapsed since the relevant date. It was, therefore, submitted that if the assessing authority applies the correct multiplier for discounting the best value which the assessee would get in the Supreme Court, which in no circumstances can exceed the value assessed by the Civil Court, the value on the relevant valuation date of every financial year cannot exceed the value offered by the Land Acquisition Officer, since the assessing authority will have to discount some percentage for every year which has passed since then. In his submission, if the exercise as indicated by the assessee is undertaken, on the facts and in the circumstances of the present case, the value may be less than the value offered by the Land Acquisition Officer. It was also emphasised by thing us through the decision of the Supreme Court that the chance of the assessee to win in the Supreme Court, do not appear to be so over-whelming. In any case the discount value for the substantial period which has elapsed since the date of the valuation would be such a detracting factor that the Court should not decline to answer the questions. Those were the submissions also made before this Court which heard the aforesaid references. In the said case also it was felt that the exercise which ought to have been done as indicated by the Supreme Court has not been fully attempted to and, therefore, one should not rush to answer the questions and leave them to the Tribunal to adjust the matter in the light of the submissions that may be made by the revenue as well as the assessee without having recourse to remitting the matter to the WTO for the purpose of carrying out the exercise afresh. We also held the same view.
7. It may be stated that the Division Bench of this Court had assessed and estimated the fair market value of the property, namely, right to receive compensation for the land acquired by the government and therefore that aspect cannot be overlooked. It is also clear that a substantial period has elapsed for which, if a proper discount factor is applied, the revenue may not find itself in a more advantageous position, but having regard to the legal position which has been laid down by the Supreme Court, we are of the opinion that in absence of proper exercise having been done, we should decline to answer the questions following the course adopted by the Supreme Court in CIT v. Indian Molasses Co. P. Ltd. : 78ITR474(SC) . We hope and recommend to the Tribunal that it will complete this exercise within a period of eight weeks from the date of the receipt of this order by the Tribunal in the light of the material which has been already collected and the further material which the parties want to adduce, and in the light of what we have stated hereinabove.
8. The result is that we decline to answer the question and leave it to the Tribunal to adjust accordingly, with no order as to costs. Reference disposed of accordingly.